Chen v Prasad

[2012] NZHC 1404

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-001636 [2012] NZHC 1404

IN THE MATTER OF     an application for leave to Lodge a Second Caveat under s 148 of the Land Transfer Act 1952

BETWEEN  ZUNHUI CHEN Applicant

ANDMAHENDRA PRASAD Respondent

CIV-2012-404-1637

AND BETWEEN            ZUNHUI CHEN Applicant

ANDCRW TRUST Respondent

Hearing:         15 June 2012

Appearances: Mr Singh for Applicant

Mr Airey for Respondent in CIV-2012-404-1636
Mr Gazley for Respondent in CIV-2012-404-1637

Judgment:      20 June 2012

JUDGMENT OF ASSOCIATE JUDGE J P DOOGUE

This judgment was delivered by me on

20.06.12 at 4.30 pm, pursuant to

Rule 11.5  of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Counsel:

Mr Shean Singh, Barrister and Solicitor, P O Box 10018 Dominion Road , Auckland

Mr J M Airey, Inder Lynch, P O Box 76-745, Manukau

Mr Scott Gazley, S W Legal, Auckland - [email protected]

CHEN V PRASAD HC AK CIV-2012-404-001636 [20 June 2012]and CHEN v CRW TRUST HC AK CIV-

2012-404-1637

[1]      In these two proceedings the applicant seeks leave to lodge a second caveat against the title to two separate properties.  I shall deal first with the property at 27

Nicholas Gibbons Drive, Clendon Park, Auckland which is the subject of CIV-2012-

404-1636.

[2]      The applicant has filed an application to lodge a further caveat based upon a tenancy agreement which was entered into between the previous owner of the property, a Mr Jia Guilan and Chen Zunhui.  The agreement was stated to be:

Prepaid rent (lease) from 30 September 2011 to 30.09 2017 as per sale and purchase agreement dated 25.2.2011 and caveat number 8710952.4.

[3]      There was a condition in the lease which read as follows:

5.        Existing tenancy can be transferred to this tenancy agreement.

[4]      Mr Chen has previously lodged a caveat against the property which was removed by Court order and hence the need  for leave under s 48 of the  Land Transfer Act 1952.

[5]      The respondent and present owners of the property, Mr and Mrs Prasad, purchased the property on 30 March 2012 from the mortgagee, ANZ National Bank Limited (“ANZ”) which sold the property pursuant to the power of sale contained in a mortgage which it had granted to Mr Jia Guilan.  Mr Prasad gives evidence that the caveat previously lodged against the title was removed by order of the High Court on

26 March 2012.  That caveat described the interest protected as follows:

As purchaser and leasee (sic) pursuant to  agreement  dated 25/2/2001 in respect of land described in indemnifier NA 135B/655 and agreement dated

1/3/2011 in respect of land described in identifier NA 76C/620 between the

registered proprietor Guilan Jia and the caveator.

[6]      The basis upon which the caveat was lodged described by a Mr Lau in his affidavit was that the parties who purchased the property did so at their own risk having regard to the “prepaid lease” agreement to which I have referred.   It also apparently relied upon a provision in the standard conditions that applied to the mortgagee sale which read:

16.The purchaser acknowledges the property is sold subject to existing tenancy or occupations (if any) ...

[7]      There is no evidence whatsoever that the ANZ agreed to the tenancy upon which Mr Chen relies and accordingly, by reason of s 105 of the Land Transfer Act

1952 there is no reason to suppose that the lease arrangement between the former owner and Mr Chen survived the transfer to Mr and Mrs Prasad.

[8]      Although  it  was  not  referred  to  in  the  notice  of  application,  Mr  Chen’s

counsel, Mr Singh, raised the issue of s 58 of the Residential Tenancy Act 1986.

[9]      Mr Prasad said in his affidavit that he knew about the tenancy to Ms Tania Aropa and as the bank was not selling with vacant possession, the Prasad’s understood that on the purchase of the property Ms Aropa’s tenancy would continue but  it  would  be  converted  to  a  periodic  tenancy  under  the  provisions  of  the Residential Tenancies Act 1986 (“RTA”).  The Prasad’s expect that they would have to give Ms Aropa prescribed notice under the Act if they wished to terminate her tenancy.   Mr Prasad never accepted that there was any arrangement between Mr Chen and Mr Jia Guilan although he did understand that Mr Chen contended for some type of interest in the property.  I infer that he knew, broadly speaking, that this was a six year lease that Mr Chen now brings his application on the basis of.

[10]     However even if Mr Prasad did know about the asserted claim, it was not in any event a tenancy that was in existence at the time when the mortgagee sale took place.  It was pointed out in argument, there can only be one tenancy at a time and there was no dispute that Ms Aropa was actually living in the property pursuant to a tenancy agreement.   It is correct that that tenancy continued but as Mr Prasad has observed, that tenancy is converted to a periodic tenancy on the sale of the property pursuant to the exercise of the mortgagee’s power of sale because of the provisions of s 58.  The important point is though that at the point when Mr Prasad and his wife acquired title to the property it was Ms Aropa’s tenancy, whether in original form or the converted form, which was binding on the purchasers and not Mr Chen.   Mr Chen does not have any rights under the RTA.  There is no need therefore to go on investigating the further question of whether he has a caveatable interest over the property.

[11]     Leave is declined for him to lodge a second caveat.

[12]     Even if my foregoing conclusions were incorrect, I would decline leave in any  event  because  the  proposed  caveat  would  be  lodged  pursuant  to  a  lease agreement which was the subject of the earlier caveat which the Court discharged.  It would not be a proper exercise of discretion to enable that matter to be litigated a second time.

CIV-2012-404-1637

[13]     The position in this proceeding is similar to that in CIV-2012-404-1636. However in the case in favour of the proposed second caveat the purchaser’s position is stronger than that of the Prasads.   Mr Waalkens who gave evidence for the purchaser’s said that before the auction he had not actually been to the physical address.   He was not made aware of the nature of any tenancies in relation to the property at the time of bidding at the auction.  It is correct that in the conditions of sale the ANZ did not provide an assurance of vacant possession of the property. That, on the other hand, could not bind the purchaser to acknowledging a lease which Mr Chen said that he entered into with the previous owner and of which the purchaser from the mortgagee had no knowledge.  I am of the view that there is no basis upon which the plaintiffs could argue that s 105 of the Land Transfer Act applied, there being no evidence that the mortgagee consented to the lease.  Further, the respondents would not in any event be prohibited from giving notice to Mr Chen under s 58(1)(da), the respondents not been prohibited from doing what they are entitled to by that subsection by virtue of the provisions of s 58(1)(e).  That is to say, the right that the respondents were to have to terminate the tenancy is not defeated by the fact that they are bound by the tenancy or consented in writing to its creation.

If they had no notice of the tenancy they could not be bound.[1]

[1] Ziki Investments (Properties) Limited v McDonald [2008] 417, paragraph 65.

[14]     In each case the applications are declined.  The proceedings are to be placed in my next caveat list.  If the parties have not before then agreed the matter of costs I

will determine it on that day.

J.P. Doogue

Associate Judge